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Chapter 9: Question 1E (page 476)

The inventory of Oheto Company on December 31, 2017, consists of the following items. Part Quantity Cost per Unit Net Realizable Value 110 600 \( 95 \)100 111 1,000 60 52 112 500 80 76 113 200 170 180 120 400 205 208 121a 1,600 16 1 122 300 240 235 a Part No. 121 is obsolete and has a realizable value of $1 each as scrap. Instructions 1. Determine the inventory as of December 31, 2017, by the LCNRV method, applying this method to each item. 2. Determine the inventory by the LCNRV method, applying the method to the total of the inventory.

Short Answer

Expert verified

(a) Value of inventory is $335,100.

(b) Value of inventory is $341,300.

Step by step solution

01

Schedule for LCNRV

Part No.

Quantity

Cost

Net realizable value

Total Cost

Total net realizable value

LCNRV

110

600

$95

$100

$57,000

$60,000

$57,000

111

1,000

60

52

60,000

52,000

52,000

112

500

80

76

40,000

38,000

38,000

113

200

170

180

34,000

36,000

34,000

120

400

205

208

82,000

83,200

82,000

121

1,600

16

1

25,600

1,600

1,600

122

300

240

235

72,000

70,500

70500

Totals

$370.600

$341,300

$335,100

02

Inventory value by each item basis

(a) The value of inventory as of December 31, 2017, per LCNRV applied to each item equals $335,100.

03

Inventory value by the total inventory basis

(b) The total cost of the inventory equals $370,600, and the total net realizable value equals $341,300. Hence, per the LCNRV method, the value of inventory equals $341,300 as it is the lowest between the two.

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Most popular questions from this chapter

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